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Off-premise driving restaurant sales growth

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Restaurant delivery and takeout options have exploded in recent years, thanks to a proliferation of companies entering the space with the promise of boosting to-go business and solving operators’ off-premise headaches.

Although takeout and delivery are most popular among QSR customers, according to Technomic’s 2016 Takeout & Off-Premise Dining Consumer Trend Report, takeout and delivery from fast casual, family restaurants, traditional casual dining as well as in the retail sector all showed significant gains over the least three years.

Consumers aged 18-34 are the biggest users of takeout and delivery, with half saying they order food to go more often than they did three years ago, the report found. Among all age groups, the availability of nearby takeout and delivery options and simply getting into the habit of ordering in or picking up food are the factors driving most of the growth.

When it comes to catering orders, consumers are most likely to select traditional casual dining and fast-casual restaurants, according to the Technomic report. Their three primary considerations in choosing a catering provider are order accuracy, food freshness and quality, and on-time delivery.

Food delivery companies are stepping in to partner with restaurants that want to reach consumers, especially via mobile orders, but shy away from the delivery business.

GrubHub, DoorDash, UberEats, Caviar, Amazon and Yelp’s Eat24 allow visitors to review menus from a variety of restaurants, place an order and schedule delivery. Restaurants using these services enjoy a bump in orders that they can often absorb, and the apps expose them to potential new customers. The delivery services charge a commission on orders and a fee for delivery.

It’s a problem a lot of restaurant owners might want to have, but some operators have been crushed by demand after making delivery available. Mendocino Farms, for example, partnered with DoorDash to deliver food about a year ago, and delivery orders spiked so quickly that the growing California chain had to disable the DoorDash app to keep up. The company has since adjusted by devoting more counter space to delivery drivers, installing a pickup window just for delivery orders and designing in bigger to-go areas at new locations.

But outsourcing doesn’t make sense for every restaurant. Panera Bread recently announced a commitment to adding more than 10,000 jobs, many of them for delivery drivers, as it expands delivery to 35-40% of its locations by the end of 2017, up from 15% of stores. The company is rolling out a new order tracking system that allows customers to track an order’s progress on a map and get a notification when the driver is arriving. The company decided to hire in-house drivers to maintain control.

“For us, hiring our own drivers was the only way we could ensure that our delivery guests get the same high-quality experience they have come to expect from our bakery cafés,” says Blaine Hurst, president.

The demand and technology driving delivery have also sparked growth in operations called “ghost” kitchens that skip the brick-and-mortar dining room and simply prepare foods for delivery. Green Summit in New York produces and delivers more than 7,500 meals a week from a kitchen in Brooklyn, under the guise of various brands; Momofuku chef/owner David Chang’s Maple startup also adopted that virtual restaurant business model, though on a smaller scale.

Regardless of where the food is prepared, the potential for delivery and takeout to grab an even bigger share of restaurant sales remains huge.

This post is sponsored by Catallia

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